I do not understand how Tim is selling out. Not wanting your company to go bankrupt is not selling out. That is just basic survival. No one here wants their own company to go under after spending years of hard work and tons of your own money building the company up.

This defense of Pandora is utter BS.

Instead of putting the hit on the artists, providers like Spotify and Pandora need to change their compensation model and get market value from their listeners.  Clearly they are more focussed on building a huge listener base quickly to attract investors and float an IPO instead of building a sustainable business.

Their business strategies are simply based on greed.  Content is not "digital road kill" it is the fuel that drives these businesses.

Spotify and Pandora could have a 30 day free trial period that transitions to a paid subscriber model WITH limited advertising and raise their subscription rates.  

Stop crushing the artist to make your stockholders happy.

Will Buckley, founder, FarePlay

Pandora talking points timeline

Pre-IPO:  Our business model is great, it just needs scale

IPO:  Thanks for cashing us out!

Post IPO:  Our business model is crap, but we aren't willing to change it.  It would be much easier for us if congress would just lower our expenses with a stroke of their pen.  Think about our poor shareholders...

Content is not "digital road kill"

Absolutely! A brilliant phrase. sir!  I'll remember that one...

Didn't Rhapsody already try that for the last 8+ years? How is that working?

Pandora, Spotify and Deezer should just go away.

No I don't think so... I believe that the streaming industry is the beginning of how music is evolving. Spotify does a service to people who really don't have the money to fork out on CDs and iTunes each month. I agree that the musicians are not getting there full profits from this service but i believe that Spotify is one of the greatest inventions to this day. It provides users a chance to listen to their favorite artists with a small fee per month. Go Spotify... Im a proud consumer of this service.

Spotify pays out 70% of gross to rights holders. Pandora pays out about 50% of gross and is complaining about it.

Spotify allows artists to OPT OUT, Pandora does not...

Do you guys even understand the issues here?

Well said. Also don't forget that Pandora's per-stream payment is already a fraction of Spotify's per-stream payment.

@ Richard -

If Pandora wants to pay Terrestrial Radio Royalty rates all they have to do is function like Terrestrial Radio and disable user interactivity.

Pretty simple, don't ya think?

actually, that's patently false. if you stream online, you pay internet radio streaming rates (differentiated by being on-demand vs. not on-demand). pandora's entire value proposition is predicated on being better customized radio.

becoming more like terrestrial radio makes zero sense strategically or economically.

@ incorrect - uhm, except if you want terrestrial radio rates, you should FUNCTION like a Terrrestrial Radio Station...

I understand Pandora's value proposition is increasing Pandora's wealth while asking Congress to take that money away from Musicians...

no kidding... Musicians to pay for Pandora's Wall Street Style Bail Out... wow... just wow.

Why? Pandora has to pay the same amount as other internet webcasters that function nearly identically to broadcast radio. If they changed their entire business model they would still have to pay the same amount. As long as they abide by DMCA, it doesn't matter how close it is to broadcast radio.

Pandora's wealth is not increasing. They are not profitable.

Pandora needs to learn how to monotize their product.  Something a**holes like you probably say about music providers all the time.  Why should artists get paid less so that Tim Westergren can get $millions?  Pandora does not take advantage of the advertising available in order to increase their market share of internet radio.  This is pure GREED from Pandore.  They'd rather hurt musicians than actually put the work and effort into their business. 

THEY DON'T HAVE A BUSINESS WITHOUT MUSIC!

There are plenty of non-interactive webcasters who have to pay the same rates that Pandora does.

Perhaps what should really be done is give Pandora a discount if they remove the interactive parts?

I've always been surprised that there aren't multiple tiers based on the level of interactivity.

Notoriously, in the USA, unlike most of the rest of the world, radio stations do not pay royalties at all to recording artists or labels.  (They do pay a small royalty to songwriters.)  In what sense is this a 'much fairer scale'?

Not given a fair shot?? They have 120 million users. If Pandora can't figure out how to monetize that size of an audience, they deserve to fail.

Sensationalized personal attack on Mr. Westergren makes good media, but is just distracts from the core issue:  Pandora is being discriminated against with unfair royalties relative to other radio. The playing field must be levelled. Does a snuffing out internet radio and innovation in favor of broadcast and satellite establishment help consumers or artists?  Of course not. 

Hi steve.

While I agree with you mostly.  I would like to note that "reasonable" dialogue from industry insiders has netted artists ZERO.  We are still exactly on the same trajectory we've been for years.  The digital side of the music business continues to push to devalue our work. They are in lockstep and always on message. Meanwhile industry insiders are as usual shooting at their own side.  

Industry insider's gave pandora a 50%  break on royalties in 2009 and what did it get you?  Nothing.  In fact Pandora stabbed them in the back cause they rated 

You can criticize my methods when your methods actually produce results.

It's every American's right to lobby for a change in legislation if they want.  Tim can contribute money to a congressman and even expect a quid pro quo (though that is certainly illegal for a congressman to offer one).  Tim can also seek lower rates.  As a CEO of a public company, it would be irresponsible of him to his shareholders not to try an create more favorable business conditions.

But, there is the rub.  Everyone assumes that Tim is supposed to support the artists on his service (even Tim makes that assertion).  His true allegiance, as it should be, is to the shareholders unfortunately.  That puts him in direct opposition to the interests of the participating labels and artists.  I suspect that the majors, at least, are also conflicted since they are likely shareholders as well.  

As a licensee of masters to Pandora, I can note a couple of significant differences that makes me care little about Tim's success to lower royalty rates:

• 1)  Pandora's catalog is curated and much smaller than all of the other streaming services. They made a committment a long time ago to be selective.  In addition, they are slow to ingest because of this curated process.  So, as a service, I think it has two strikes against them.  You can't select what you want to hear and you can't find most of the albums available elsewhere.
• 2)  Because of #1, we make a lot less from Pandora than other streaming services.  Reducing that even further won't really affect the role that Pandora plays to my bottom line.  It's not that great.  Our artists are not the ones mentioned by Tim who are making $100k's.  We make a lot more from interactive services than any non-interactive services.

The main benefit of Pandora, as with many other streaming services, is to aid in the discovery and development of artists.  That's hard to measure.  I have no idea of how many click thru downloads our catalog earns.  But I do know that being on Pandora is important for our labels.  That's not because of the revenue.  They know how little they are making.  It's because they want the exposure that Pandora offers.  I am totally happy to provide that for them even though my ROI on delivering content to Pandora is often put into question.   I consider the added exposure to be an intangible, but necessary, step in a band's career.  

So I have a more pragmatic take on this situation than Dave and I don't really care if Tim exhibits any hypocrisy.  If Pandora can't sustain itself under the current royalty structure and goes out of business, there are plenty of other streaming services (interactive or not) that are and will fill in the gap.  The ones who will suffer the most will be the banks and investors who bought shares.

Tim can take up the bully pulpit as much as he wants.  Even if he is successful on lowering statutory rates (which I would agree would be a bad thing), on the ground and in the streets, it doesn't have much, if any, actual impact on my biz or on my artists.  

"1)  Pandora's catalog is curated and much smaller than all of the other streaming services. They made a committment a long time ago to be selective.  In addition, they are slow to ingest because of this curated process.  So, as a service, I think it has two strikes against them.  You can't select what you want to hear and you can't find most of the albums available elsewhere.
    2)  Because of #1, we make a lot less from Pandora than other streaming services.  Reducing that even further won't really affect the role that Pandora plays to my bottom line.  It's not that great.  Our artists are not the ones mentioned by Tim who are making $100k's.  We make a lot more from interactive services than any non-interactive services."

1) Do you know how music is added to Pandora? Because if you did, you would know why their catalog is smaller.

These problems would all be solved if the licensing was done differently. The problem isn't ultimately the per stream payments for Pandora, its how much overall they are expected to pay to labels. The crazy "advances" that the labels and publishing companies ask for does NOT get paid back to the musicians, per their sketchy contracts (facts/links available upon request) yet that adds a significant cost to the music for companies like Pandora. If, for example, you are in a band and want to cover a song by, say, Michael Jackson, you don't have to approach his camp for "permission" to do this. You don't have to go through a ridiculous courting process and pay crazy money up front. It goes something like this: you register with Ascap/sesac/bmi/whoever that you are doing this, and then pay your approximate 9 cents on the dollar royalty back to that artist as your album with that cover song on it sells. Its called a compulsory license, meaning that you can cover any song you want as long as you pay for the use of that song. However, you cannot just legally start a streaming service, state to rights holders you are doing this, and then pay back a fair percentage to them. No, instead you have to license the songs or artists you distribute individually from the rights holders/companies. You see if we could all legally distribute music to eachother, or at the very least have a robust lineup of choices and ways of disseminating and paying for this music, then there wouldn't be so many issues. We are a LONG WAY away from any sort of healthy business model since the rights holders are still playing games and trying to extract disgusting amounts of money from the streaming companies, while paying back a PALTRY SUM to artists. So don't complain that the artists are getting screwed by Pandora and David Lowery. In fact kiss the darn ground he walks on, because he pays a ridiculously large portion of the digital revenue that you, the artist, gets - no matter how small or large the sum, a very great portion of it comes from Pandora. If you want to complain, complain to publishing companies and record labels, those rights holders who just take as much as they can based on their terribly inefficient business models. If it were easier to sell music, more music would get sold, more revenue would get paid directly to artists, and less revenue would be eaten up by middle men. Computers can handle most of the work and the money can be payed faster.

Pandora and other 'non-interactive' streaming/radio services are already covered by compulsory licensing, with royalty rates set by the Copyright Board.  Pandora does not need permission from copyright holders to use their music, and it does not pay 'advances' to record companies. The current dispute is about the level of royalties, not the licensing system.

And while we're at.  Many of these posts are from people I've never seen before and they clearly have the stamp of someone who is a paid lobbyist being a shill for Pandora.

If I'm wrong, please identify yourselves.  Pandora would just be a vacant url without music and killing the goose that lays the golden egg is short sighted, even for your client.

I am sick of commenters who don't know the difference between interactive, non-interactive streaming services, satellite and terrestrial radio.

Nor do they understand when a business pays a statutory license and when they must deal with copyright holders.

They all pay different license fees. They are all different business models.

Here is a link to get those of you started

http://www.soundexchange.com/service-provider/how-do-i-pay/

So until you read up and understand the differences please stop commenting.

Westergren needs to stop worrying about cheaping out on artists and more about finding additional revenue and / or boosting the existing model.

Tim, let's have a meeting and discuss your political situation.

I have several representatives that will hear your case.

Not making any promises though.

The bill might not pass and we will have to have more meetings next session.

Ha Ha Ha Ha Ha

ALL streaming sites are Bullshit. Fucking musicians in the ass from the top on down. They ALL have to go..

We should all go back to buying vinyl, and replacing it every few years as it wears out.

Maybe all the artists blaming Pandora et al for their plight should look towards themselves. It's not up to Pandora, Spotify, a recording label or anyone else to provide a meal ticket for you. It's up to you. The times change, and you can change with the times and innovate and find new ways to make a living that aren't based on the recording as a product. You're an artist, so get creative ...

Oh my God it's that old "times have changed you stupid musicians - be creative - find a new "model"" stuck record again...

Maybe so, but it seems true. Why do people complain about why things aren't the way they want them to be instead of adapting to the way they are? The first leads to paralysis and the second allows you to get on with things.

Surely you don't want to wait for the music industry, government or anyone else to fix things? Any artist has to make things HAPPEN for themselves. They have more tools and options than any other time in history.

Who laments an unfair deal they have with Pandora. Are any of the commenters here musicians who think they'd be better off not being on Pandora? It's free exposure, you're paid better than satellite, terrestrial, and any other medium of radio, and you gain the attention of a wide audience that ends up buying your music or attending your shows.

This article reads like it's from the vantage point of someone who has no skin in the game -- if this seems like it's geared toward ripping off the artist, you've clearly never seen the rest of the music industry.

I would put my music on Pandora if they didn't make it a bitch and a half to do so. It's basically impossible unless you are signed to a major.

Request it as a listener. They are supposedly pretty good about fulfilling requests for their users.

I managed to get my music on there and I'm not even signed to an indie label. Totally possible. 

Andy

Uniform Motion

I agree. Streaming music services aren't perfect, but it's an improvement on the FM radio thing. I've never seen any uproar about how radio doesn't pay ANY money for airplay.

First, let me state that I don't represent Pandora, rather, I rep several bands on Pandora as well as one internet radio station. 

It's correct that Pandora operates under a statutory license. Sound Exchange collects a per-stream royalty that is in addition to what Pandora pays to ASCAP/BMI/SESAC.  The CRB sets the rates that Sound Exchange collects.  Pandora, and any non-interactive streaming service is permitted under the Millenium Copyright Act & the Code of Federal Regulations to negotiate direct licenses with labels, but the CRB/SoundExchange system is supposed to provide a simpler & more cost-effective route.  

The bill that Westergren is pushing is not asking for anything outrageous, just parity with non-interactive streaming services that were given preferential "grandfather" style treatment as they already existed at the time of passage of the Millenium Copyright Act (i.e., Sirius, XM, and cable).  The American way, one would think, means parity for competitors operating in the same regulated marketplace.  Why would we support an unfair system?  Just because it benefits some of us?  Or we think it does?

If the Internet Radio Fairness Act passed, that may mean Pandora's rates fall, but it will also likely mean that the rates charged to other services that were given preferential treatment in the passage of the Millenium copyright act will now go up.  What will really, really, increase revenues that result from performances is if Congress enacts legislation charging terrestrial radio the same fees, or similar fees that get charged only for digital transmissions.  If you're an artist advocate, this is where you should be drawing your battle lines.  

The CRB's rate process was never designed to empower a new digital streaming industry.   It was in fact designed to slow it down (see the Brookings Institution analysis http://bit.ly/Wqpcha and this follow up http://bit.ly/QjdQ9t).  The CRB's rates are impeding this industry as the RIAA & terrestrial broadcasters planned.  

But if Pandora & other streaming audio services go away, that doesn't mean we will return to the salad days of CD level revenues.  It just means there will be a vacuum to fill, and the folks that fill that vacuum will not likely be legitimate capitalists looking to turn a profit, but pirates happy to disregard our little arguments.  

Artist advocates (my own band has 2 albums on Pandora, so I count myself among you), don't take a short sighted view.  If Pandora & other streaming services like it can thrive, this industry will grow & so will the overall revenue pie.  

But you do represent another digital radio station.  thanks for being honest.  Now be honest about this:

1)Why does this bill seek to muzzle AFTRA, AFM Soundexchange and the PRO's  by saying THE SHERMAN ACT applies when it comes unions, PRO's anddirect licensing?   This has been a right wing wet dream since the advent of the labour union.  To  apply the anti-monopoly laws to trade unions.  But even in 1894 when an attempt was made to bust the American Railway Union with the Sherman Act,  the union was still free to speak out.  In my 30 years in the music business (or any business) have I never seen something so blatantly pro corporate, anti worker and anti-free speech.   If this is about "fairness" why are our unions and trade organizations being muzzled?  This is like the google books case, forcing each individual author to sue google instead of letting the Authors Guild represent and negotiate. 

2) It fires the Copyright Royalty Board and replaces the Judges with a Kangaroo court.  It spefically lists evidence and arguments that the court is forbidden from hearing.  It changes the length of service the judges are supposed to have  (from 7  to 10 years) so that the current judges which pandora does not like, can't be re appointed.  

http://musictechpolicy.wordpress.com/2012/10/12/mr-pandora-stays-silent-on-draconian-irfa-court-packing-and-union-busting/

Judging by your blog http://digilegal.wordpress.com/ your positions are all pro websteaming and anti-artists royalties. If you represent artists they clearly aren't reading your blog Arthur J Owens.   Shame on Pandora, Shame on You sir.  You are shilling.

David, you might have missed the fact that I mentioned that I represent bands as well, and my own music happens to be on Pandora.  

I want internet radio to thrive because that will generate a larger pie of royalties, meaning more money for the bands I rep, including my own, as well as more viability for my pureplay internet radio clients.  Internet radio isn't thriving, and Pandora is bleeding a slow death.  If they go, that means less money and less exposure for independent artists.  

Internet radio could be a burgeoning cottage industry, but that's only if the rates go way down.  The CRB rates were overinflated & based on bogus premises, as I described at length in my blog.  Nothing is going to survive in the current environment.  

Am I the only one unable to access the Sound Exchange website? Have been trying for several months now. I am located in Canada.

By the way, I sent Pandora an email tonight. Basically warning them they do not have permission to use my music, or to over-saturate the channels with my content which could cause a loss in revenues. Pandora is not available in Canada, to the best of my knowledge.

I am aware they are a non-interactive streaming service and do not need my permission.

Just curious: do you tell Canadian radio stations not to play your music as well?

Interesting read. But for probably something like 95% of artists, the diff would be maybe, what, $30 a year, if that. I get the principle of Lowery's point, but the problem is more a saturated market with a decreasing audience that pays anything at all to 'consume' recordings. Spotify, certainly, isn't making any money yet, I doubt Pandora is either. Not 'real' profit, anyway. The amount the consumer is willing to pay is too low to support those trying to make a living out of recordings, and no service can raise their rates high enough to do so without losing users and so going under. No idea where we go next, but expecting all musicians to be 'artists' and magically find an income out of other stuff doesn't really help. We make music, not sell 'access' or 'merch' or make enough money doing gigs, most of us. There aren't that many other options. My own 'answer' has been to just about stop making music for 'consumer listening' and just do TV, library, film music. My kids gotta eat, and that's the bottom line.